The Different Types of Fixed Deposits

Fixed deposits are a popular choice among investors because they are low-risk investments with higher interest rates than other low-risk investment alternatives.

The term ‘Fixed Deposits’ implies depositing your investment with the firm for a fixed amount of time to get interested from your money invested by them.

Withdrawing money before the term is over is possible but comes with penalties. Hence, people with funds to spare Fixed Deposits are a great option. To invest with the surety that you will not lose your money.

What to Expect from Fixed Deposits?

Fixed Deposit schemes are of various types. For example, you have Standard, Special, Tax Saving, and Floating fixed deposits.

They all come with various terms and conditions. Since Banks and NBFCs issue fixed Deposits schemes, various firms tend to offer different rates and tenures as a part of their plans.

Choosing the correct plan for yourself with the highest FD interest rates is one of the most important steps of planning to invest in Fixed Deposits.

Types of Fixed Deposits in the Market

  1. Standard Fixed Deposits

This is the basic kind of fixed deposit provided by almost every bank in India. Within them, there are other options like Cumulative and non-cumulative Fixed Deposit schemes. The interest rate is almost always predetermined.

One is expected to get higher interest rates if the money is invested for a longer time. In non-cumulative standard deposits, one can earn an amount of interest as regular money. However, in cumulative options, you can earn compound interest over time.

  1. Floating Fixed Deposits

Floating fixed deposits refer to deposits with variable interest rates. Over the period that the money is kept with the firm, the interest rates in the market fluctuate. Hence the interest rate received by the investors is benefited by the change in the market to get the highest FD interest rates.

This kind of investment is not recommended for beginners, since there is a greater risk per se, although there is virtually no loss incurred.

  1. Tax Saving Fixed Deposit

As the name suggests, the major benefit of these Fixed Deposits is that they present to the investor a huge amount of tax exemption. But Tax Saving Fixed Deposit Schemes are always made for long periods i.e. five years or more.

Another point to remember is that, unlike a standard deposit, no loan facility is rewarded against a fixed deposit. This type of investment again is completely free. An investor can receive tax benefits of up to 1.5 lakhs.

  1. Special Fixed Deposits

These are preferred most by people who want regular income from their interest rates. Special Fixed Deposits are usually released for short periods, say 290-390 days terms. They are called ‘special’ because they are offered at certain special times.

Many seasonal offers are introduced into the market using this type of FD scheme. They are popular because of their short tenure and pay the highest FD interest rates.


Fixed Deposits are a great way to get into the world of investment. Knowledge is the key to making your investments grow and bring greater returns. In this post, we have discussed 4 great fixed deposit options. However, you should continue to gather more information so that your investment decisions are based on facts rather than instincts.  

Must Read: What is a Pre-Approved Home Loan?

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